Greg Norman's Great White Shark venture fund feeds sports tech boom
When Greg Norman's Great White Shark Opportunity Fund this week took part in a $US21 million funding round for sports video start-up Playsight Interactive it confirmed the surging global interest in sports analytics.
The deal also provided a pointer to the apparent gap in the valuations of privately owned start-ups and publicly listed companies operating in similar fields. The Playsight deal could prompt investors to reassess the valuation placed on fast growing Australian sports analytics company, Catapult.
Ben Weiss, who arranged about $US6 million of the $US21 million in funds raised by Playsight, said the capital would be used to accelerate Playsight's global expansion including a push into Australia.
Weiss, who divides his time between Israel and Hong Kong, is in charge of venture capital investments by two Asian domiciled funds, CE Ventures and Softbank Ventures Korea. These funds have joined with Norman's venture capital fund, Verizon Ventures and leading sports stars to back Playsight.
The sports stars with shares in Playsight include many former professional tennis players including Darren Cahill, Pete Sampras, Billie Jean King and Norman's former wife Chris Evert. The shareholders also include US hedge fund manager Bill Ackman.
There is a bias towards tennis because the company's founders, two Israeli military veterans, Shen Shachar and Evgeni Khazanov, found it was easier for multiple video cameras to track the movements of players on a tennis court rather than larger sporting fields.
The Playsight technology has since evolved to include basketball, football, baseball, volleyball and ice hockey. In Australia, the company wants to target rugby league and cricket, according to Weiss.
Like every start-up Playsight has ambitious goals. Weiss says it wants to be the de-facto standard for the analysis of the performance of atheletes in all gyms and courts in every school and college campus around the world.
Playsight is one of many companies using computer vision as a tool for analysing the performance of athletes. But Weiss says it developed the world's first all-in-one video and analytics, SmartCourt.
A SmartCourt uses connected cameras to analyse, index, store and stream on-court activity without any player sensors during the match or training. Playsight claims to be able to track, identify and capture the motion of players and objects in real time.
The Playsight technology has been used in the United States for video replays to resolve accusations of cheating. Its video assistant referee product is called PlayFair and is being piloted by the US Tennis Association.
Each SmartCourt video set up costs about $US30,000 to install. This high cost of installation could inhibit its take up among amateurs and the company's goal of bringing elite technology to a recreational level.
Nevertheless, Playsight is trying to position itself as a cost-effective alternative to a range of other sports analytic technologies such as Hawk-Eye, SportVu, ZEPP, Second Spectrum, Babolai, krossover, LiveBarn, Flo Sports, Zenniz and Spideo.
Playsight does not publish its revenue but Norman's venture capital fund only invests in companies with annual revenue less than $US25 million. Based on the amount raised in the lastest capital raising it would be reasonable to assume Playsight is valued in the mid to high single tens of millions of dollars. In other words, somewhere between $50 million and $100 million.
These estimates point to a gap in the valuation of privately funded sports tech companies and publicly owned ones such as Catapult, which is the global leader in wearable sports tech.
Late last month Catapult, which is headed by executive chairman Adir Shiffman, raised $25 million in growth capital by way of an institutional placement of 22.7 million shares. The placement was supported by some astute investors including Greencape Capital, Ellerston Capital, Regal Funds Management and AustralianSuper.
On Friday Catapult was valued by the market at $233 million and yet it is expected to have total revenue this financial year of at least $76 million. About 1600 teams have signed up to use Catapult's wearable and video technology.
The noteworthy aspect of this revenue figure is that Catapult estimates its addressable market for the use of wearables by elite athletes is $450 million to $550 million. Shiffman says the elite wearable market is under penetrated with an additional 10,000 teams potentially available to be signed up.
Shiffman says the capital raised in March will be used to fund the company's expansion in elite sales in the US, Europe and Asia by 30 per cent. It will pay for increased marketing and distribution for the "prosumer" market, which refers to any players who are not elite. Also, the company will hire more software development staff and develop new products.
The focus of the prosumer market will be soccer which has an addressable market of 20 million players. The initial target will be 3 million players with the use of Catapult's PlayerTek equipment.
Catapult became the world leader in wearable sports analytics thanks to its partnership with the AFL, which uses its patented ClearSky technology. It later extended its reach with a partnership with the ARL.
Last year was a huge year for the commercialisation of Catapult's technology. It was used in the 2017 NRL State of Origin, the 2017 AFL Finals Series, the 2017 NBL seasons and in the England v Australia 2017/18 cricket series.
The company has beefed up its management ranks in the past year with the appointment of former Telstra deputy chief financial officer Mark Hall as CFO and Richmond Football Club director and former SEEK executive, Joe Powell as CEO.
Wearable technology is causing a sea change in the management of the careers of elite athletes. It has allowed players to extend their careers through targeted management of injuries.
For example, a player signed to a 10 year contract at age 22 could be able, with the help of wearable technology that tracked their every move on the field, to judiciously manage their career.
Catapult is one of a number of tech companies that have built their business model on subscriptions. This type of revenue is often not well understood by investors.
Morgans, the broker which was the lead manager of the recent placement, says the fund raising document implied Catapult would not break even until 2021. It describes the company as a high risk investment.
TONY BOYD tony.boyd@copyright link.au
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